Ghana’s fiscal economy could be at risk due to election-induced expenditures in the coming year.
This warning comes from the 2024 Quarterly Report by Databank Research, which highlights concerns about budgetary allocations and the potential for inflationary pressures. The report notes that the government’s proposed increase in capital expenditure from GH¢20.44 billion in 2023 to GH¢28.70 billion in 2024 could lead to fiscal overruns and stimulate price pressures.
Geopolitical risks, such as the ongoing Russia-Ukraine war and tensions in the Middle East, also pose a threat to the fiscal economy. The report suggests that these developments, combined with production from OPEC+, could push up energy prices, leading to spillover effects into domestic prices and utility tariffs.
Furthermore, the report highlights new tax measures, including a 15% VAT on electricity for residential consumers and a proposed emission tax, as potential contributors to inflationary pressures, particularly in the utilities and transport sectors.
The escalation of geopolitical tensions may also have a negative impact on Ghana’s trade balance, as higher oil prices could result in a higher import bill for the country.
Overall, the report underscores the potential challenges that Ghana’s fiscal economy may face in the coming year, urging stakeholders to carefully monitor these factors and their potential impact on the country’s economic stability.
